Ally Financial Inc. · NYSE:ALLY
Ally Financial — General Motors Acceptance — Investor Presentation (April 2006)
36 slides from Ally Financial's investor presentation, Apr 24, 2006
Slide 1: Forward Looking Statements
Forward Looking Statements In the presentation that follows and in related comments by General Motors Acceptance Corporation management, our use of the words "expect", "anticipate", "estimate", "forecast", "objective", "plan", "goal", "project", "outlook", "priorities", "targets", "intend", "evaluat
Slide 2: Outline for Discussion
Sale of Controlling Interest in GMAC GMAC Business Update Q & A Outline for Discussion
Slide 3: Sale of Controlling Interest in GMAC
Sale of Controlling Interest in GMAC
Slide 4: GM has agreed to sell a 51% controlling interest in GMAC to a Consortium
GM has agreed to sell a 51% controlling interest in GMAC to a Consortium led by Cerberus Capital Cerberus will control all of the Consortium's 51% voting shares Long-term and strategic investment by Consortium Minimum hold period of five years to allow for stability and growth Consortium and GM to i
Slide 5: Introduction (cont'd)
Arranging credit facilities totaling $25 billion -- supported by $12.5 billion Citigroup commitment -- to enhance GMAC's already strong liquidity Committed 3-year revolving facility Asset-backed funding to support lease, wholesale, SmartBuy and other not traditionally securitized assets GMAC's inher
Slide 6: Value Enhancement
Believe value will be maximized for stakeholders not through short-term "cash out" actions, but by way of long-term focus on: Strengthening the capital base Improving the credit ratings Reducing borrowing costs Expanding net margins Driving higher ROE GMAC Strategy intended to support desired path t
Slide 7: Cerberus Capital Management, L.P.
Cerberus Capital Capital Management, L.P. One of the largest private investment firms in North America, with $18 billion under management Experienced investor in financial institutions and automotive businesses Cerberus operating approach Strong track record of performance Highly flexible capital wi
Slide 8: Components of Transaction
Components of Transaction GM expects to receive approximately $14B in cash over 3 years Proceeds of $7.4B based on 51% of tangible book value, after excluding certain assets to be retained by GM Cash dividend of $2.7B associated with conversion of GMAC and most of its U.S. based subsidiaries (exclud
Slide 9: GMAC Capitalization Summary
Common Equity Ownership Consortium 51% GM 49% Preferred Equity GM and Consortium to invest additional $1.9 billion in preferred equity to further bolster GMAC capital base $1.4 billion investment by GM $0.5 billion investment by Consortium Preferred stock intended to be structured with high equity c
Slide 10: GMAC Capitalization Summary (cont'd)
Long-term investment by Consortium Committed to a 5-year minimum hold period Restriction on IPOs of secondary shares Restrictions on sale of material subsidiaries In years 1-2 after closing, plan to retain essentially all GMAC's "after- tax" earnings in the business In years 3-5 after closing, Cerbe
Slide 11: Strong Independent Corporate Governance
Strong Independent Corporate Governance Cerberus will be the managing owner of GMAC LLC and control the Consortium's 51% voting shares Board Composition: 13 Board members Consortium: 6 GM: 4 Independent: 3 Audit Committee to consist of all three Independent Directors Consortium has the ability to ra
Slide 12: Mutually Beneficial Services Agreements
Mutually Beneficial Services Agreements Services Agreements support key GM-GMAC objectives: GM: Strategic support for GM vehicle sales worldwide GMAC: Increased finance penetration and revenue GMAC granted 10-year exclusivity covering U.S., Canadian and International subvented wholesale and consumer
Slide 13: Profitable Asset Generation Capability Protected
Will continue to finance GM vehicles to customers across the full credit spectrum Profitable Asset Generation Capability Protected Services agreements will preserve GM / GMAC mutually-beneficial relationship for the long-term Support global $60+ billion a year auto loan origination platform Services
Slide 14: Assets Retained By GM
Assets Retained By GM At closing, GM will retain approximately $20 billion of assets Predominantly U.S. lease assets and associated funding Net book value estimated at about $4 billion Retained lease assets reduce GMAC's credit exposure to GM Eliminates residual support payments owed by GM to GMAC i
Slide 15: Credit Exposure to GM
Credit Exposure to GM Under terms of transaction, GMAC's unsecured credit exposure to GM will be capped at $1.5 billion on a global basis Cap will include receivables from GM and any implicit "out of the money" risk sharing or residual value support due to loss in residual values Estimate that GMAC'
Slide 16: GM Call Option on Global Auto Finance Business
GM Call Option on Global Auto Finance Business GM Call Option GM call option term of ten years on Global Auto Finance business Can exercise if GM ratings are investment grade or are higher than GMAC's ratings Exercise price greater of: Fair market value 9.5 times the auto business net income
Slide 17: Credit Ratings Post-Closing
Credit Ratings Post - Closing Transaction expected to achieve rating de-linkage from GM Sale by GM of controlling interest Dramatic reduction in GM exposure Sound governance to protect all GMAC stakeholders Contractual agreement that ensures arm's length GM-GMAC operating relationship Target stable
Slide 18: Next Steps
Next Steps Meet all pre-closing conditions PBGC agreement that GMAC and its subsidiaries will have no liability that could arise from GM's pension plans Repayment of certain inter-company debts Obtain significant number of regulatory approvals Certain legal opinions No Material Adverse Effect (inclu
Slide 19: Transaction Benefits Summary - GM
Significant liquidity for GM $10 billion upfront $14 billion over 3 years Broader auto financing support for GM GM will benefit from comprehensive wholesale and retail automotive financing to support its vehicle sales globally Ongoing earnings from GM's 49% equity stake retained in GMAC Minority equ
Slide 20: Transaction Benefits Summary - GMAC
Strengthened GMAC capital base long-term Preferred equity injection of $1.9 billion Earnings reinvestment provisions Improved GMAC liquidity Committed 3-year $25 billion funding facilities Anticipated access to unsecured markets GM paydown of large inter-company obligations Significant and steady fl
Slide 21: GMAC Business Update
GMAC FINANCIAL SERVICES GMAC Business Update
Slide 22: Business Outlook -- 2006 Consolidated Results
Business Outlook -- 2006 Consolidated Results Financing Operations Mortgage Operations Insurance Operations Funding Update
Slide 23: Consolidated Earnings Trend
Consolidated Earnings Trend $ millions Non-Financing 16% 22% 24% 30% 26% 31% 34% 30% 34% 51% 49% 62% % of Income Financing Mortgage / Insurance * Excluding after-tax goodwill impairment of $439 million *
Slide 24: Net Income - First Quarter
2005 2005 2006 2006 Fav/(Unfav) 2005 Financing $248 $248 $313 $65 Mortgage 385 385 198 (187) Insurance 95 95 129 34 Total $728 $728 $640 ($88) Net Income - First Quarter $ Millions Note: Amounts are presented on the basis reported by GMAC, which may differ from those reported for GMAC by GM during t
Slide 25: Insurance Operations
Insurance Operations Increasing competitive trends Premium / Revenue growing International growth Niche acquisitions Favorable loss cost experience Steadily increasing underwriting profits Growing investment portfolio Insurance Net Income ($ Billions) 12/02 12/03 12/04 12/05 Market Value of Investme
Slide 26: Mortgage Operations
Mortgage Operations GMAC has maintained strong profitability at its Residential Mortgage Operations despite decline in industry volume and margin pressures Growth in residential market share for 9 consecutive years Increased mortgage servicing income Profitable expansion overseas Stand-alone investm
Slide 27: Financing Operations
Financing Operations Financing $ Millions Funding constrained business Ratings impact competitiveness Leverage existing relationships to capture opportunities within GM dealer channel Leverage existing dealer relationships to expand presence in non-GM dealer network Continue to expand footprint into
Slide 28: Funding Update
GMAC FINANCIAL SERVICES Funding Update
Slide 29: GMAC Global Liquidity
GMAC Global Liquidity GMAC continues to have access to large liquidity cushion Cash balance of $22 billion* at March 31, 2006 Over $45 billion of unutilized bank lines and conduit capacity Multi-year committed whole loan facilities with Bank of America and Bank of Nova Scotia with $59 billion of unu
Slide 30: GMAC Global Liquidity (cont'd)
GMAC Global Liquidity (cont'd) In March, closed sale of majority interest in GMAC Commercial Mortgage and received $8.8 billion comprised of sale proceeds and repayment of inter-company debt, thereby further increasing GMAC's liquidity position Strong stand-alone ResCap funding capability establishe
Slide 31: GMAC Global Liquidity Profile
GMAC Global Liquidity Profile GMAC has access to massive liquidity cushion Three large, multi-year funding agreements: Bank of America (BofA), Bank of Nova Scotia (BNS) and new $25B Citigroup-led facility BofA and BNS commitments for retail assets while Citigroup-led facilities includes leases, whol
Slide 32: ResCap Capital Structure
ResCap Capital Structure GMAC plans to maintain the ResCap firewall to preserve ResCap's relatively higher credit rating Firewall: Governance and Dividend Limitations ResCap already enjoys significant access to unsecured liquidity
Slide 33: GMAC Funding Plan
GMAC Funding Plan GMAC's innovative funding initiatives have reduced its need to rely on unsecured financing With a stable and potentially improving credit rating post- closing, GMAC will opportunistically seek to access the unsecured institutional and retail markets Will enhance GMAC's liquidity pr
Slide 34: Summary and Conclusion
Summary and Conclusion Following the closing of the recently announced sale of a 51% controlling interest in GMAC to a consortium led by Cerberus, GMAC will be even better positioned to execute our business plan under which we will: Support GM vehicle sales with a broad range of auto financing activ
Slide 35: Q&A
GMAC FINANCIAL SERVICES Q&A
Slide 36: GMAC FINANCIAL SERVICES
GMAC FINANCIAL SERVICES
General Motors Acceptance — Investor Presentation (April 2006) on 6ix